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Fannie Mae to Introduce Trended Data to Underwriting Platform


Fannie Mae has announced that starting in mid-2016 it will begin incorporating trended credit data into its automated underwriting platform, introducing important changes to help strengthen the home mortgage market for both consumers and lenders.

Trended Credit Data – In mid-2016, Fannie Mae will require lenders to use trended credit data when underwriting single-family borrowers through Desktop Underwriter®. This data will be provided by Equifax and TransUnion, and allows a smarter, more thorough analysis of the borrower’s credit history. Currently, credit reports used in mortgage lending only indicate the outstanding balance and if a borrower has been on time or delinquent on existing credit accounts such as credit cards, mortgages or student loans.  With trended credit data, lenders will have access to the monthly payment amounts that a consumer has made on these accounts over time.  Among other benefits, this will allow lenders to determine if the borrower tends to pay off revolving credit lines such as credit cards each month, or if the borrower tends to carry a balance from month-to-month while making minimum or other payments.  Desktop Underwriter will be updated to utilize this trended credit data, and Fannie Mae will provide additional guidance to in the coming months.

Trended data will expand the credit information used for evaluating a home loan applicant, supplementing the traditional moment-in-time snapshot of an applicant's credit balances with a more dynamic two-year picture of the applicant's history managing revolving accounts. With 24 months of historical data like payment and balance history, lenders will be able to examine and consider how consumers are managing their credit accounts over time

Trended credit data will also help lenders differentiate between "transactors" and "revolvers." A home mortgage applicant with a large credit card balance who has a history of paying in full every month (a "transactor") is typically considered to be a better credit risk than an applicant with a large credit card balance who only makes the minimum required payment (a "revolver"). Existing credit reports, however, can't always differentiate between those two consumers.


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